Federal Low Income Housing Tax Credit (LIHTC) Recapture Surety Bond
Overview
Awarded low-income housing tax credits and now facing a compliance or ownership change? Federal tax credit rules require that allocated LIHTC funds stay in qualified use for a mandatory compliance period — and any event that triggers recapture puts those credits at risk. A Federal LIHTC Recapture Surety Bond protects the government's interest by guaranteeing repayment of recaptured tax credits if a disqualifying event occurs. Bond Titan makes it fast and straightforward to get this bond in place so your project can move forward.
Who Needs This Bond?
Developers who received low-income housing tax credit allocations, ownership entities transferring an interest in a qualified LIHTC property, and investors or syndicators managing extended-use agreements are the primary parties who need this bond. If your project involves a disposition, refinancing, or change in ownership structure during the compliance period, a recapture bond may be required before the transaction is approved. Any party whose action could trigger federal recapture liability is a potential principal on this bond.
What is this Bond For?
This bond exists to guarantee that recaptured LIHTC funds will be repaid to the federal government if a disqualifying event causes credits to be taken back by the IRS. Low-income housing tax credits are allocated with strict compliance requirements tied to rent, income, and use restrictions over a defined period. When those requirements are not met — or when an ownership transfer threatens compliance — recapture liability can arise. The bond stands as financial assurance that the obligation will be satisfied.
When is it Required?
This bond is requested at the point in a transaction or compliance review when a recapture risk is identified — typically during a property transfer, partnership restructuring, or exit from a LIHTC-financed project. Lenders, syndicators, state housing finance agencies, and the IRS may all flag the need for a recapture surety bond before approving a disposition or change in ownership. If you have received notice that a recapture bond is required to close your transaction, you need to act immediately.
Where Does it Apply?
This is a federal-level bond requirement tied to IRS rules governing the Low-Income Housing Tax Credit program. It applies nationwide — the bond is not issued by a specific state agency but relates to federal tax credit allocations made under the national LIHTC program. The bond travels with the transaction, not with a state license, and its scope is defined by the terms of the credit allocation and compliance agreement.
How to Buy Online
Click 'Buy This Bond Online' on this page and our secure surety portal will open in a new tab — that's the secure portal where you complete your application and move toward issuance. Have your project details, credit allocation information, and bond amount ready before you start. Bond Titan processes these applications without requiring you to wait on an agent callback.
Why Bond Titan?
Bond Titan is powered by The Southern Agency, giving you access to a nationwide surety bond catalog built for business owners and developers who need bonds fast. You can apply online at any time without scheduling calls or waiting for a local agent. Specialized bonds like the Federal LIHTC Recapture Surety Bond are handled here with the same speed and clarity as any standard commercial bond.